Bankruptcy Terms and Definitions
- Bankruptcy: Filing of a proceeding, dealing with debt problems for individuals or corporations. Bankruptcies in the United States are filed in the United States Bankruptcy Court. The United States Constitution reserves to the Federal Government the authority to make all laws concerning bankruptcy.
- Automatic Stay: Upon filing a bankruptcy, the court enjoins all creditors from moving forward with foreclosures, garnishments, lawsuits and legal proceedings of all types. All collection activity stops because of the automatic stay.
- Bankruptcy Petition: The actual documents filed in the bankruptcy court, showing the court the debtor is bankrupt.
- Chapter 7: Chapter 7 bankruptcy under the bankruptcy code is a “liquidation”. The debtors is non-exempt, assets are liquidated and distributed to the creditors. In most Chapter 7 bankruptcies the debtor has no non-exempt assets and the creditors receive no funds.
- Chapter 13: This is a bankruptcy filed for individuals that has a repayment plan of between three and five years.
- Conformation: This is the approval by the bankruptcy judge of the bankruptcy.
- Creditor: This is someone who is owed money by the debtor, or person filing bankruptcy.
- Credit Counseling: A program where the debtor receives information about bankruptcy related issues. A credit counseling course must be taken in two sections in a bankruptcy. The first portion must be taken prior to filing the bankruptcy and the second portion must be taken after the first creditors meeting.
- Debtor: A person who files a bankruptcy.
- Discharge: The releasing of the debtor pursuant to the bankruptcy code of all liability from the dischargeable debts maintained in the debtors bankruptcy petition.
- Equity: The value of what the debtor possess in an asset. The asset can be a car, a home or other non-exempt property.
- Executory contract: This is a contract where performance must take place in the future by both parties.
- Exemptions: This refers to the property of the debtor that either under the bankruptcy code or New York State Law, the debtor is allowed to keep from unsecured creditors. New York State has for example, a $150,000 per person homestead exemption. A husband and wife filing a joint bankruptcy will therefore be entitled to $300,000 of equity in their home.
- Means Test: This is a test to determine whether a individual debtor or joint debtors can file a Chapter 7 bankruptcy. There are certain financial standards on debtors filing this type of bankruptcy that must be met.
- Preference: This is a payment that is made during the period of ninety (90) days prior to the date the debtor filed for bankruptcy. These payments can be challenged in the bankruptcy.
- Reaffirmation Agreement: This is an agreement by an individual who filed for Chapter 7 bankruptcy to continue to pay a debt that was dischargeable in the bankruptcy. Examples of debts paid by debtors are mortgage payments and car loans. The reason why a debtor would pay these debts is because there is a lien on the property. The lien will survive the bankruptcy.
- Secured Debt: This is a debt where in the creditor has a lien on an asset to secure the debt.
- 341 Meeting: This is the creditors meeting under the bankruptcy code, section 341. At the time of the meeting the bankruptcy trustee will ask the debtor questions about the material contained in his or her bankruptcy.
- Trustee: This is the person appointed by the court to take all action to administer the bankruptcy filed by the debtor.
- Unsecured Claim: This is a debt wherein the creditor has no security interest in any asset. Credit cards are the most common type of unsecured debt.
The Law Offices of Schlissel DeCorpo has offices in Lynbrook, Queens, and Suffolk County, and we represent individuals and businesses throughout the New York metropolitan area, including Long Island NY, Nassau County, Suffolk County, Westchester County; and NYC’s five boroughs of The Bronx, Brooklyn, Manhattan, Queens, and Staten Island, NY
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With offices in Lynbrook, Queens, and Suffolk County, the Law Offices of Schlissel DeCorpo represents individuals and businesses throughout the New York metropolitan area, including Long Island NY, Nassau County, Suffolk County, Westchester County; and NYC’s five boroughs of The Bronx, Brooklyn, Manhattan, Queens, and Staten Island, NY.